Image of a smashed piggy bank and hammer, to illustrate ‘Hostage Nation’ report

A major new report argues that the UK is a “Hostage Nation,” trapped by a set of rules we wrote ourselves. It urges our politicians to rip up the ransom note and implement the escape plan.

The report launched on 22 September. It explodes the myth that “we can’t afford it“, exposing it as a political choice, not an economic fact. Hostage Nation lands just weeks before a first Burnham Budget. It challenges his government to invest in the UK’s people and break with the failed economic consensus.

The UK has the money, land and people to reverse a death-spiral of rising bills, insecure work and climate collapse. We could guarantee citizens an energy bill they can manage, a home they can afford and a job that lasts, but we choose not to.

That’s the central charge of Hostage Nation: Britain’s Escape Plan, a substantial new report by former Metro mayor Jamie Driscoll.

The report arrives as prime minister Andy Burnham and chancellor John Healey prepare an Autumn Budget, on 28 October, framed around the government’s self-imposed fiscal rules. Hostage Nation argues those rules are a trap, not a safeguard.

It argues that the phrase heard for forty years, “we can’t afford it,” applied to housing, buses, social care and anything that would make ordinary life cheaper or safer, is not a statement of fact. Rather, it’s the summary of decisions:

made by somebody, in a meeting, in a building, on a date.

Change the decisions, the report says, and the sentence stops being true.

‘Hostage Nation’ makes three arguments in plain language

One, the constraints are self-imposed.

The UK has adopted ten sets of fiscal rules since 1997 and abandoned nine of them. We must ditch them and focus on productive investment. The Bank of England has only one target, inflation, and only one tool, the interest rate. Reform its remit and make sure it’s working for the British people.

Two, the state can fund what it builds without depending on bond markets that panic.

Around a third of UK government bonds are held by international traders with no real stake in the future of the country. Yet they effectively decide if we build schools and railways.

There is plenty of money sitting in UK hands outside the bond market: cash earning less than inflation. Offer savers a fair, index-linked return on the assets the country needs, and the finance follows.

UK pension funds hold under 5% of their assets in UK companies. In 2000 this figure was closer to 50%. Encourage the pension funds to invest in bankable UK infrastructure by redirecting the tax benefits onshore. The government doesn’t tell people where to put their money, but makes it more attractive to invest in rebuilding the country.

Three, we can create good jobs, cheaper bills and healthier communities, starting with a ‘Retrofit Blitz’.

It can be done without inflation, by building capacity first. Every £1 invested by government in retrofitting our cold, leaky housing stock will add between £1-£3.20 to GDP and return between £0.40-£1.25 in tax revenue.

Train the workers and build the supply chains before releasing the money, not after. Funding is drawn only when the ability to spend it well exists, thus managing inflation.

We can’t afford another Truss disaster

Hostage Nation reserves particular attention for the Liz Truss mini-budget of September 2022. It calls this a “ghost story”, used to frighten the public into accepting permanent decline.

On the report’s reading, the markets did not punish ambition. They choked on a glut of government bonds the Bank of England had confirmed it would sell the day before. But the human cost fell on households. The Institute for Fiscal Studies found mortgage rate rises had pushed 320,000 people into poverty by the end of 2023.

Lead author of Hostage Nation, Jamie Driscoll, said:

For forty years we have been told the same four words, ‘we can’t afford it’, and we have treated them like the weather: a natural phenomenon, out of our control.

But they are a political choice, and the powers to choose differently are already on the statute book, some of them over a century old. This is not a wish list. It is an escape plan, and every figure in it is there to be tested.

Crucially, the report says, almost none of the plan requires new legislation. The rest is the hard, unglamorous work of rebuilding the capacity to build. A national retrofit of the UK’s cold, leaky housing stock, energy sold at cost, and transport treated as infrastructure rather than a balance sheet.

Responding to Hostage Nation, economist and former minister of finance of Greece, Yanis Varoufakis said:

This is a brilliant report. Comprehensive, beautifully written, punchily argued, diplomatic without compromising on the main principles.

It tells the people out there, ‘Here is what our governments could be doing today if they only chose to.’

It exhausts the limits of the present institutional and legal framework to bring on the most radical changes and maximum tangible social benefits, while remaining within the realm of political-institutional ‘moderation’.

In this sense, it is commendable and to be welcomed enthusiastically. Indeed, I have very little to add to it!

Hostage Nation spans 33 chapters, with more than 130 endnotes supporting every claim. “The evidence is there,” the report states:

because every figure in this report should be checkable by somebody who would rather it were wrong.

Featured image via the Canary

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